Microloans Help The Poor

When she was First Lady, the current U.S. Secretary of State Hillary Rodham Clinton said that "our destiny is strongly linked to the destiny of the poorest."

To elevate the fortunes of a society, one must begin by lifting the least fortunate out of poverty. And one proven way to do this is by making micro-credit available to them.

Microloans are very small loans made available to people who do not qualify for conventional loans because they have little or no collateral, and often no steady employment. Microloans allow the very poorest to set up a small business without falling into the clutches of loan-sharks.

"Microcredit is an invaluable tool in alleviating poverty," said Secretary Clinton "Microcredit projects can create a ripple effect - not only in lifting individuals out of poverty and moving mothers from welfare to work, but in creating jobs, promoting businesses and building capital in depressed areas."

This is especially true when it involves loans to women. In many traditional societies, women have been excluded from the market economy, and have had no access to financial services. Yet they are the greatest beneficiaries of micro credit, especially women in South Asia, where the majority of micro lending takes place. And most of these loans go to women.

Grameen Bank of Bangladesh, which is at the forefront of micro-lending, reports that once women had access to small amounts of money to support their businesses, their status within the family and the community improved. Mohammad Yunus, founder of Grameen Bank, said that it quickly became obvious that their female clients used their earnings to benefit their families much more than male borrowers did.

Borrowers typically take out loans of no more than a few $100, and use the money to start a business, such as selling food and vegetables or small items from a market stall, raising chickens, or providing services like sewing or cleaning. And 95 percent of them repay every penny they borrowed.

Microcredit helps women by empowering them and is an important tool in the fight against poverty, fundamentalism and violence against women, children, and vulnerable communities.

"Microcredit," said Secretary of State Clinton, "has positive consequences on the entire community, and creates a fertile soil for democracy to grow because women and men can hope in the future of the planet again."